By Stephanie Collins, CPA, Business Assurance & Advisory Services Manager
Overview of single audits for nonprofits receiving federal funds
After a months-long delay, the final version of the 2025 Compliance Supplement (the “Supplement”) was released by the Office of Management and Budget (“OMB”) in late November 2025.
The Supplement is issued annually to include updates for new and deleted federal programs, and to stay current with OMB guidance. The requirements in the 2025 Supplement apply to single audits of fiscal years beginning after June 30, 2024. A draft version of the Supplement was released in August 2025 to aid in audit planning. Single audit reports for fiscal years ending on or after June 30, 2025, can now be released. The final version aligns closely with the draft but still warrants careful review to ensure any changes from the draft impacting audit requirements have been addressed.
Uniform Guidance revisions now reflected in the 2025 supplement
Appendix V outlines key changes from the 2024 Supplement, which had already been included in the draft. Most notably, the 2025 Supplement incorporates the 2024 revisions to the Uniform Guidance (“UG”), including the following:
- Increase the Single Audit threshold and the major program determination threshold to $1 million from $750,000
- Changes to de minimus indirect cost rate (from 10% to 15%) and thresholds for capital expenditures
- Replaces the term “nonfederal entity” with “recipient” and “subrecipient”
Managing federal awards subject to different Uniform Guidance rules
Accordingly, Part 3 of the Supplement is broken into two parts, 3.1 and 3.2. This section outlines the compliance requirements subject to audit for federal awards, and for 2025 includes key instructions for auditors in determining which compliance requirements are applicable for individual awards (pre or post 2024 UG revisions). Though the 2024 UG revisions were effective government wide as of October 1, 2024, federal agencies did not adopt the revisions universally. As such, recipients of federal awards may have some that are subject to the UG requirements in effect prior to October 1, 2024, and some where the 2024 UG revisions are applicable.
Updates to programs, risk designations, and compliance matrix
Appendix V also includes the list of programs and clusters with changes in 2025. Other changes in the 2025 Supplement include revisions to the matrix of compliance requirements in Part 2 (updates shown in yellow), and updates to programs with a higher risk designation, laid out in Appendix IV. For 2025, all COVID-19 programs were removed from the list of programs designated as higher risk.
Next steps
Auditors and recipients alike should review federal awards carefully to determine which version of the compliance requirements apply, and auditors should include documentation surrounding the determination of applicable compliance requirements to test in their workpapers. Recipients should also review internal policies and procedures to ensure alignment with updated compliance requirements for their programs.
Questions about how the 2025 updates affect your organization’s single audit or federal funding compliance? Connect with Keiter’s nonprofit team to get practical guidance tailored to your programs. | Email | Call: 804.747.0000
Read more Keiter insights on single audits and the Supplement:
About the Author
Stephanie Collins, CPA, Business Assurance & Advisory Services Manager
Stephanie joined the Business Assurance and Advisory Services group in 2021. Stephanie has experience with auditing procedures, financial reporting, and business process reviews, and evaluation of internal control. Stephanie is a member of the Not-For-Profit Industry team.
Prior to joining the firm, Stephanie worked for public accounting firms in the Washington DC area serving primarily non-profit organizations. She also gained internal accounting experience at a large public company, working with accounting systems, month-end close, and implementation of new accounting guidance.
More Insights from Stephanie CollinsThe information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.
